Skip to contents

Short Term Debt Ratio

Source: R/get-debt-shortterm-ratio.R
get_debt_shortterm_ratio.Rd

Measures short-term obligations as a share of total net assets.

Formula:

stdr = short_term_liabilities / net_assets

short_term_liabilities = accounts_payable + grants_payable

Definitional Range

Bounded below at zero when net assets are positive. Negative values occur when net assets are negative (accumulated deficit), which makes the ratio uninterpretable as a burden measure. Unbounded above when net assets approach zero. Typical values for financially stable nonprofits are in the [0, 0.30] range.

Benchmarks and rules of thumb

  • Values below 0.10 indicate modest short-term payables relative to the equity base – a comfortable position.

  • Values above 0.30 suggest near-term obligations are placing meaningful pressure on net assets.

Calculated For: 990 + 990EZ filers.

Usage

get_debt_shortterm_ratio( df,
  accounts_payable = "F9_10_LIAB_ACC_PAYABLE_EOY",
  grants_payable   = "F9_10_LIAB_GRANT_PAYABLE_EOY",
  net_assets       = "F9_10_NAFB_TOT_EOY",
  numerator = NULL, denominator = NULL, winsorize = 0.98 ,
  range     = "zp",
  sanitize  = TRUE,
  summarize = FALSE )

Arguments

df

A data.frame containing the fields required for computing the metric.

accounts_payable

Accounts payable and accrued expenses, EOY.

grants_payable

Grants and similar amounts payable, EOY.

net_assets

Total net assets, EOY.

numerator

Optional. A pre-aggregated column for short-term liabilities. Cannot be combined with accounts_payable or grants_payable.

denominator

Optional. A pre-aggregated column for the denominator. Cannot be combined with net_assets.

winsorize

The winsorization value (between 0 and 1), defaults to 0.98, which winsorizes at the 1st and 99th percentiles.

range

Character string specifying the theoretical range of the ratio, used to set winsorization bounds. Default "zp". Options: "np" (negative to positive), "zp" (zero to positive), "zo" (zero to one), "nz" (negative to zero), or a custom "lo;hi" pair (e.g. "0;10").

sanitize

Logical (default TRUE). If TRUE, NA values in the financial input columns are imputed to zero before the ratio is computed, respecting form scope: Part X and VIII/IX fields (990 only) are imputed only for 990 filers; Part I summary fields (990 + 990EZ) are imputed for all filers. The returned dataframe always contains the original unmodified input columns.

summarize

Logical. If TRUE, prints a summary() of the results and plots density curves for all four output columns (raw, winsorized, z-score, percentile). Defaults to FALSE.

Value

Object of class data.frame: the original dataframe appended with four new columns:

- `debt_shortterm`   - short term debt ratio (raw)
- `debt_shortterm_w` - winsorized version
- `debt_shortterm_z` - standardized z-score (based on winsorized values)
- `debt_shortterm_p` - percentile rank (1-100)

Details

Primary uses and key insights

The short term debt ratio measures what share of total net assets is represented by near-term payables (accounts payable plus grants payable). It is a measure of the pressure that immediate obligations place on the equity base. A high ratio means current payables are large relative to net assets, which can signal cash flow stress even for organizations that appear solvent on a long-term basis.

Note that unlike most debt ratios, the denominator here is net assets rather than total liabilities or total assets. This measures the short-term burden relative to the equity cushion.

Formula variations and their sources

Some formulations use total current liabilities (including all short-term items) / total net assets. This implementation uses accounts payable plus grants payable as the best available proxy for current liabilities on the 990, consistent with the approach used across this package's liquidity measures. Total net assets (Part X line 33B) is used as the denominator rather than unrestricted net assets, for broader applicability.

Canonical citations

  • Tuckman, H.P. & Chang, C.F. (1991). A methodology for measuring the financial vulnerability of charitable nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 20(4), 445-460.

Variables used:

  • F9_10_LIAB_ACC_PAYABLE_EOY: Accounts payable and accrued expenses, EOY (accounts_payable)

  • F9_10_LIAB_GRANT_PAYABLE_EOY: Grants and similar amounts payable, EOY (grants_payable)

  • F9_10_NAFB_TOT_EOY: Total net assets, EOY (net_assets)

Examples

library( fiscal )
data( dat10k )

d <- get_debt_shortterm_ratio( df = dat10k )
#>    :: Net assets equal to zero :: 262 case(s) replaced with NaN
head( d[ , c( "debt_shortterm", "debt_shortterm_w", "debt_shortterm_z", "debt_shortterm_p" ) ] )
#>    debt_shortterm debt_shortterm_w debt_shortterm_z debt_shortterm_p
#>             <num>            <num>            <num>            <int>
#> 1:             NA               NA               NA               NA
#> 2:     0.00000000       0.00000000       -0.1555310                5
#> 3:     0.01720865       0.01720865        0.3777266               66
#> 4:             NA               NA               NA               NA
#> 5:     0.12019870       0.12019870        1.1483884               89
#> 6:             NA               NA               NA               NA